Mortgage equity withdrawal rising

Homeowners are now borrowing more equity against the value of their homes according to the latest figures. The Bank of England announced that in the final quarter of 2006 homeowners borrowed around £14.6bn against the value of their homes.

Overall mortgage equity withdrawal in 2006 that figure was £49.7bn, which was a huge rise from 2005 as that figure was £36.6bn. Economists are now predicting that this will encourage more spending on the high street, as people have more money to spend.

This is a double edged sword though, because the more we spend then The Bank of England will be forced to put up interest rates, and if there was a drop in house prices then homeowners could then owe more on their mortgage than their house is actually worth.